Pahalgam Aftermath: India stopped all imports from Pakistan; How is bilateral trade now, what will be the change?

New Delhi| India has immediately banned any direct or indirect import of goods from Pakistan. A provision has been added to the Foreign Trade Policy (FTP) 2023, a notification issued on 02 May from the Ministry of Commerce. Under this, direct or indirect import of all goods originating in or exported from Pakistan has been banned with immediate effect till further orders. The Directorate General of Foreign Trade (DGFT) said in the notification that this ban has been taken keeping in mind national security and public interests. The notification also states that any exception to the exemption from this restriction will require the approval of the Government of India.

Business tension on peak after Pahalgam terrorist attack
The government has taken this step after the Pahalgam terrorist attacks last month. 26 tourists were killed in this barbaric attack. Amid the ban on imports from Pakistan, the Ministry of Shipping and Waterways has announced that ships carrying the flag of Pakistan will not be allowed to visit any Indian port. Indian flagged ships will not visit any port in Pakistan. What is the current status of bilateral trade between India and Pakistan? What impact will the immediate ban on imports from Pakistan have on this trade?

Ban on any kind of import from Pakistan with immediate effect
India’s imposition of direct and indirect ban on imports from Pakistan will stop the arrival of any kind of goods in the country from the neighboring country. Between April 2024 to January 2025, India had exported about US$447.65 million to Pakistan. On the other hand, India imported a mere $0.42 million from Pakistan during this period. This import will stop completely after the fresh ban. India’s main imports from the neighboring country during April – January 2024-25 included products such as fruits and nuts (US$0.08 million), some oilseeds and medicinal plants (US$0.26 million), and organic chemicals. Now this import will stop completely. India has taken many important steps after the Pahalgam terrorist attack. This also includes the immediate closure of the Atari land-transit post. This post has been used for the movement of goods between the two countries. Apart from this, India has also announced the immediate expulsion of people associated with the army posted in the Pakistani embassy of the country and suspension of the Indus Water Treaty of 1960.

Trade between the two countries has already come to a standstill due to Pakistan’s misdeeds
Trade between India and Pakistan has already come to a complete standstill due to the actions of the neighboring country in supporting terrorist activities. Bilateral trade between the two countries became almost negligible after the strong measures taken by India after the Pulwama terror attack in 2019. During that time, Pakistan, irked by India’s strictness, had also announced suspension of all types of trade with India. Talking about 2023-24, India exported about $1.18 billion to Pakistan. At the same time, only $2.88 million was imported during this period.

What is the condition of India-Pakistan bilateral trade in the last few years?
Earlier, in the years 2022-23 and 2021-22, India exported goods worth close to $627.1 million and $513.82 million to Pakistan respectively. In response, India imported only $20.11 million and $2.54 million worth of products in these two years. Exports of organic chemicals and medicines made between April 2024 to January 2025 to Pakistan account for about 60 per cent of the country’s total exports. It totaled $129.55 million and $110.06 million, respectively. In addition, India has provided Pakistan with sugar and products made from sugar ($85.16 million), some vegetables ($3.77 million), coffee, tea and spices ($1.66 million), cereals ($1.39 million), petroleum products ($11.63 million), fertilizers ($6 million), plastics ($4.16 million), Exported rubber ($1.88 million) and auto components ($28.57 million).

Business relations between the two countries came to a standstill after the 2019 Pulwama attack
Trade relations between India and Pakistan deteriorated after the 2019 Pulwama terror attack. After this, India had increased the import duty on all goods imported from the neighboring country to 200 per cent. Imported goods include fresh fruits, cement, petroleum products and mineral ores. In 2017-18, there were $488.5 million in exports from Pakistan to India. Meanwhile, India had also withdrawn MFN (Most Favored Nation) status from Pakistan. The two main items imported from Pakistan at that time were fruits and cement. Imposing a 200 per cent import duty on these products meant almost a ban on imports.

Pakistan lost the status of MFN country
India used a provision related to the World Trade Organization (WTO) security exception to withdraw MFN status from Pakistan. Both countries are members of this organization. India had already granted MFN status to Pakistan in 1996, but the neighboring country had not responded to it. Under the MFN Treaty, a WTO member country is obliged to treat the other trading nation in a non-discriminatory manner. This provision applies in particular in cases involving customs duties and other charges.

Pakistan repeatedly reneged on its promises, now in trouble
In 2012, Pakistan committed to granting FFN status to India, but later reneged on it due to domestic opposition. Instead of MFN, Pakistan said it was working on granting non-discriminatory market access (NDMA) status to India, but this was also not announced. In August 2019, Pakistan also suspended trade relations with New Delhi after heavy duties were imposed on imports from India. The two countries have a long history of strained relations, mainly due to support to terrorism from Kashmir and Pakistan. India-Pakistan total bilateral trade stood at $2.41 billion in 2017-18, compared to $2.27 billion in 2016-17. India imported goods worth $488.5 million from Pakistan and exported goods worth US$1.92 billion in 2017-18.

What did experts say on the import ban from Pakistan?
“However, Pakistan still needs Indian products and can continue to access them through recorded and unregistered routes through third countries”, said Ajay Srivastava, founder of GTRI. India’s already negligible imports from Pakistan will now be reduced to zero. No one will feel the lack of anything in India. This could only have a minor impact on imports of Himalayan Pink Salt (Sandha Salt) extracted from Pakistan’s salt deposits Commenting on India’s decision, think tank GTRI said India is not dependent on Pakistani goods. Therefore its economic impact on the country will be minimal.

What things are imported and exported between India and Pakistan
The main commodities exported from India to Pakistan – cotton, organic chemicals, food products including animal feed, food vegetables, plastic goods, man-made fibers, coffee, tea, spices, dyes, oilseeds, dairy products, pharmaceuticals etc.

The main commodities imported from Pakistan by India are copper and copper goods, edible fruits and nuts, cotton, salt, sulfur and soil and stones, organic chemicals, mineral fuels, plastic products, wool, glassware, Raw skin and leather etc.